Why Air India sale could fast-track BSNL's privatisation

Why Air India sale could fast-track BSNL's privatisation

Inexplicable delay in launch of 4G services for years has cost BSNL dear.

The government's sale of Air India to the Tatas on Friday has had an inadvertent domino effect on another ailing PSU – the telecom giant BSNL. Many believe that a clean break of the government from running white elephants like BSNL and equally troubled MTNL is now the best possible roadmap ahead.

“At some point they will have to demonstrate how they will survive in an extremely competitive environment by providing service and improving quality,” said Rishi Bhatnagar, chairman of the IET Future Tech Panel. “This is not just about BSNL, but about the entire government approach towards streamlining performance of PSUs. Because the government will have to get a sense of how they will get the returns before making any other significant financial investment.”

So, is sell-off the only option on the table? It may then, perhaps, be spectacularly wrong timing to launch an employee stir.

But that, and a plethora of other signs of trouble, is exactly what is brewing at the sick telecom giant which, at one point of time along with MTNL, enjoyed state-sanctioned monopoly over telephony across India.

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Inexplicable delay in launch of 4G services for years has cost BSNL dear. Forget 4G, private telecom operators are already doing 5G trials. One of the reasons the government denied permission was so that BSNL employed only 'atmanirbhar' indigenous provider for infra technology – a tall order many reading conspiracy into. “BSNL has no 4G infrastructure and has already sought the Centre's approval for upgrading. Now all eyes are on the government's revival package strategy for BSNL,” said Harsha Solanki, managing director (India) of Infobip, a global cloud communications platform.

Now, employees, already scared of future rumblings like privatisation (there was even a talk of merging with equally troubled private player Vodafone-Idea in recent times), are up in arms against CMD P.K.Purwar. Blaming him for the woes of BSNL, employees are set to go on a nationwide demonstration on October 26, calling for his removal. “P.K. Purwar is mainly responsible for the all-round failure of the company,” said a circular issued by all unions and associations of BSNL, the AUAB.

What has particularly incensed the employees has been the slow collapse of BSNL into even deeper debt, despite a massive government bailout two years ago. In 2019, the Union government has given Rs 69,000 crore to both the troubled sarkari telecom firms to tide over their troubles. While BSNL managed to halve its losses from Rs 15,500 crore to Rs 7,441 the next year, its outstanding debt still stands at a humongous Rs 30,000 crore.

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Staff feel no constructive step to shore up the company bottom line, like launching 4G or upgrading infrastructure, was taken despite the huge amount the company received. Worse, Purwar has just asked the government for another 40,000 crore rupees, half of which is needed in the form of sovereign guarantee to clear short-term debt.

Though, this time, Purwar says the company does not need any additional debt and its business has become self-sustainable to support the operations. “We have asked for Rs 20,000 crore soverign guarantee to pay back our short-term debt and issue long term bonds. We will need Rs 20,000 crore if we have to set up one lakh node B (mobile sites) for mobile network rollout,” he told PTI.

But the questions are simple – couldn't it have been done with the earlier bailout? And what guarantee is there that this infusion of money, even if the Narendra Modi government acquiesce, will do the trick when nothing worked all these years?

Social media is also agog that the government consciously let BSNL wither away, so that private operators could benefit and that privatisation is the best option in front of it. They also point out to how the proposed merger of BSNL and MTNL (ironic considering that MTNL was hived off from the parent four decades ago) is yet to take place and that following the successful AI privatisation, the government will press the accelerator when it comes to more PSU privatisation. BSNL-MTNL's turn could come sooner rather than later.

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